Wall St slides as debt ceiling talks drag on; Fed minutes in focus
Reuters
Published May 24, 2023 06:06
Updated May 24, 2023 13:03
By Shreyashi Sanyal and Shristi Achar A
(Reuters) - Wall Street's main indexes fell on Wednesday as talks between the White House and Republican representatives on raising the debt ceiling dragged on, while investors awaited minutes from the Federal Reserve's last meeting.
The lack of progress on raising the U.S. government's $31.4 trillion debt limit ahead of the June 1 deadline, with several rounds of inconclusive talks, has kept investors on edge as the risk of an unprecedented default looms large.
Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy reconvened for another round of discussions on Wednesday.
"These updates that you get that talks are progressing or breaking down, it's just more sources of volatility," said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Company.
The CBOE Volatility Index, known as Wall Street's fear gauge, hovered near three-week highs.
Investors also awaited minutes from the Fed's May 2-3 meeting, due at 1400 ET (1800 GMT), to assess the central bank's interest-rate path.
"We're at this inflection point where there's going to be disagreement at the FOMC, and you should probably start to see that show up in the minutes," said Jamie Cox, managing partner at Harris Financial Group
Cox added that policymakers may be torn between fighting inflation and its impact on the economy following the banking crisis.
Shorter-dated Treasury yields continued to rise, with yields on the 1-month bond hitting another record high at 5.8920%.
Nvidia Corp fell 2.0% ahead of its quarterly earnings after markets close. The chipmaker is the fifth most-valuable publicly traded company and the top performer in the S&P 500 index, up 105% for the year.
Energy stocks were a bright spot, with the S&P 500 energy index up 0.8% as oil prices rose about 2% after a drawdown in U.S. crude inventories. [O/R]
At 12:16 p.m. ET, the Dow Jones Industrial Average was down 271.74 points, or 0.82%, at 32,783.77, the S&P 500 was down 36.78 points, or 0.89%, at 4,108.80, and the Nasdaq Composite was down 117.55 points, or 0.94%, at 12,442.70.
Citigroup Inc (NYSE:C) fell 3.1% as the lender abandoned the sale of its Mexican retail unit, Banamex, opting for a dual stock listing instead.
Agilent Technologies Inc (NYSE:A) shares plunged 7.9% after the company cut its annual sales and profit forecasts.
Mid-cap retailers rose after earnings, with Kohl's Corp (NYSE:KSS) up 5.1% as the department store chain posted a surprise first-quarter profit and reaffirmed its annual sales forecast.
Urban Outfitters Inc (NASDAQ:URBN) jumped 16.2% as the apparel retailer posted upbeat quarterly results, while peer Abercrombie & Fitch Co soared 27.1% on raising its annual sales forecast, both betting on steady demand.
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Declining issues outnumbered advancers by a 3.79-to-1 ratio on the NYSE and by a 2.76-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and 10 new lows, while the Nasdaq recorded 21 new highs and 76 new lows.
Written By: Reuters
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